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  • What You Need to Know About Alternative Lenders

    What You Need to Know About Alternative Lenders

    Applying for a mortgage can be a nerve-racking experience when you are unsure you will be able to qualify. If you apply at any of the big banks, you will be forced to meet some pretty strict criteria to qualify. While banks have the right to choose who they do and do not lend to, having your mortgage application denied can be a disheartening experience. Some people may not even try to get a mortgage at all if they know they won’t meet the criteria.

    Despite the fact that the big banks represent the largest volume of mortgage lending in Canada, they are far from your only option. If you have been denied a mortgage from one of Canada’s major lenders or are simply looking for different options, there are many other lenders who may be willing to work with you.

    These alternative lenders offer many of the same products as a major lender but with a few differences. Though they are a valid option to pursue when buying a home, it is crucial that you understand what makes these alternative lenders different from the major lenders before you borrow for a mortgage.

    What are alternative mortgage lenders?
    ‘Alternative mortgage lender’ is a general term for a range of different groups that provide loans for home buyers. A majority of Canadian mortgages are borrowed from the Big 5 banks. These banks offer some of the best mortgage options but are very strict about who they will approve, and they are highly regulated by government policy. Alternative lenders, on the other hand, have more flexibility on what kind of terms they offer. They also often have different criteria when it comes to approving mortgages. Alternative lenders may include smaller banks, credit unions, B-lenders, and private mortgage lenders.

    Each different type of lender in the Canadian mortgage industry operates slightly differently, but they all provide mortgage lending in some form or another. Because mortgage lenders may take on riskier borrowers, they need to cover their risk somehow, and the result is often marginally higher interest rates. However, the difference can be relatively minor to a borrower, especially when it comes down to getting a home or not. In other cases, alternative lenders may be able to offer somewhat lower rates than a bank mortgage.

    Just because mortgage lenders aren’t one of the big banks, this doesn’t make them any less a legitimate source of financing. The most popular alternative mortgage lenders are highly reputable companies with whom thousands of Canadians get mortgages every year. As being qualified at a major lender becomes more difficult, many Canadians are looking to alternative mortgage lenders to fund their home purchases.

    Why should I choose an alternative lender?
    There are a few reasons why people choose to go with alternative mortgage lenders. The most common is that they are unable to meet the high criteria that major banks have in place. This could be due to high debt, low income, a damaged credit score, or something else.

    This can also be helpful for people who have unstable or alternative income sources such as rental income or income from being self-employed. Even if you have the money to afford the monthly payments on your loan, the big banks may still reject you on other grounds.

    For example, the major banks must follow the mortgage stress test when approving mortgages. The stress test tests your ability to pay at a much higher interest rate— 5.25% or 2% higher than the rate you are signing on, whichever is higher. Some alternative lenders, on the other hand, do not need to follow this test, which may be a good option if you could not pass at a bank.

    Alternative mortgages can also come in handy if you already have a mortgage with a major lender, but your financial situation has changed since your term started, and you are now at risk of being denied a renewal. In this case, you might want to consider renewing or refinancing with an alternative lender.

    Alternative lenders also offer much more flexible terms that A-lenders may be less likely to offer. This may include short or long amortization periods, low down payments, and more.

    Technically you can put yourself at risk by applying for a mortgage with less strict criteria, but you have a lot more agency in making that call rather than having a bank make the call for you. This doesn’t mean that alternative lenders will approve just anyone. However, even an alternative lender will reject your application if your financial state is truly poor.

    What kinds of mortgages do alternative mortgage lenders offer?
    Like with a major lender, alternative lenders offer a few different mortgage products, and each has its own use for a borrower. These include the standard options you would expect from any bank, such as a traditional mortgage, a home equity loan, a HELOC, a second mortgage, or a refinance. Other options for alternative lending may include:

    Bridge Loans – A bridge loan is a short-term loan that is intended to tide over a period of time. For example, you might use a bridge loan to cover a down payment before your previous home sells or improve your financial status to be approved for a full mortgage.

    Rent to Own – In a rent-to-own plan, you rent from a property owner at an increased rate, with the extra money going towards a down payment. Eventually, once you have saved enough through renting, you can use the down payment money and convert it to a standard mortgage.

    Seller Financing – Seller financing is essentially borrowing money from the seller to buy their home, which is then paid back over time. This may also be known as a vendor-take-back. Because you aren’t dealing with a financial institution, these loans can be very flexible if you can negotiate, but it can also be hard to find a willing lender.

    Reverse Mortgage – Rather than making monthly mortgage payments to a bank, the bank pays a homeowner regular payments against their home equity in a reverse mortgage. At the end of a reverse mortgage, the loan is usually paid back with proceeds from selling the home. These loans are only offered to people above 55 and are intended to serve as income during retirement years.

    Construction Loans – Construction loans are used to fund the cost of building a new home. Once the house is completed, the loan can be paid back or rolled over into a regular mortgage.

    Types of Alternative Lenders Compared
    There is not a single kind of alternative mortgage lender. Rather there are various types of businesses that each have their own business structures, products offered, and regulations they follow. Here are some of the most common types of alternative lenders.

    Credit Unions – A credit union operates a lot like a standard bank, offering bank accounts and financing, among other services, but with a different ownership structure. Credit unions are considered not-for-profit businesses that provide financial services to their members. To become a member, you are often required to own shares in the credit union, which can cost around $100. Interest rates on credit union mortgages are often comparable and, at times, better than rates at big banks. Credit unions are one of the most popular alternative lenders in Canada.

    Monoline Lenders – A monoline lender is a financial institution that offers only a single type of lending in the form of mortgages. Monoline lenders usually don’t have any physical locations and instead are contacted through the phone or internet. Monoline lenders can offer mortgage rates that are fairly comparable to major banks but may have different terms, fees, and penalties.

    B-Lenders – B-Lenders are a type of mortgage lender that don’t follow the same strict regulations as the big banks and, as a result, can lend with different qualifying criteria. Often the cost of having lower qualifying standards is a higher interest rate.

    Private Lenders – Private lenders are the least regulated of all lenders in Canada and cover a wide range of entities, from private mortgage companies to wealthy individuals who want to loan their money out. Because they don’t need to follow regulated mortgage rules, the terms on mortgage loans offered by private lenders can vary greatly and, in many cases, will be highly negotiable. Though these lenders can offer some flexibility, they can also offer a worse deal than larger banks as they have to cover their risk.

  • Interest Rate Hikes: How it Could Impact Your Finances

    Interest Rate Hikes: How it Could Impact Your Finances

    What is the policy interest rate?
    The policy interest rate is the fixed interest rate set by a financial institution for a country or group of countries. This determines how much it will cost to borrow money from a central bank. In our case, the Bank of Canada is the one that is regulating, among other things, the country’s economic activity. Once the Bank of Canada sets the policy interest rate, other financial institutions use it to set the interest rate on a variety of loans (personal, mortgages, etc.) offered to clients. The current increase is an attempt to counteract inflation, which is rising in Canada and the US.

    What is inflation?
    Inflation is an overall increase in the average price of goods and services. When inflation is low and predictable, it means that the economy is doing well, and the overall value of money is stable. Long story short, it means you have more money in your pocket.

    When inflation is too high, consumers, businesses and investors lose purchasing power. This means overall economic development suffers. When this happens, the Bank of Canada will usually step in with a policy interest rate hike to try and stabilize the economy.

    How does an increase in the policy interest rate affect my finances?
    Most people will be affected by a policy interest rate increase. This means that they’ll pay more interest on their loans. Households and businesses are more likely to reduce their expenses when this happens. Demand for goods and services is expected to decline and their prices may stabilize in the future:

    • New homebuyers may have to pass a mortgage stress test at a higher rate. Currently, the mortgage stress test is at the higher of 5.25%, or the mortgage rate plus 2%.
    • If you have a variable rate mortgage, your monthly payments will increase. Fixed rate mortgages will only be affected when you renew.
    • This could be an opportunity to make new investments. While the market is down right now, it could be the right time to buy low on interesting stocks. Also, investments such as GIC’s or bonds see their interest rates rise in a period of rising rates.
    • If your mortgage term expires in less than 6 months, an early renewal may be the key to helping you secure a lower rate before the next rate increase without penalty. If your term expires in more than 6 months, you’ll need to consider the penalty fee when making a decision on early renewal.
    • While food, gas, and furniture cost more than this time last year, now’s the right time to readjust and evaluate your budget.

    Policy interest rate hike: do I need to review my financial plans?
    If there’s a policy interest rate hike, take some time to think about your current projects and future plans, and make informed decisions. You might save money by postponing a major project rather than tackling it now. Alternatively, now be the time to consolidate your debt and get your ducks in a row before rates increase further.

  • 10 Brilliant Ontario Staycation Ideas to Enjoy This Summer

    10 Brilliant Ontario Staycation Ideas to Enjoy This Summer

    Looking for Ontario staycation ideas? We have some of the best tips for local vacations in Ontario right here. From glamping to wine tours and more. Ontario is awesome! And with the summer coming into full swing and the Ontario Staycation tax credit, Ontario staycation ideas have never been more popular.

    The temporary Ontario Staycation Tax Credit for 2022 aims to encourage Ontario families to explore the province, while helping the tourism and hospitality sectors recover from the financial impacts of the COVID‑19 pandemic. Ontario residents can claim 20% of their eligible 2022 accommodation expenses, for example, for a stay at a hotel, cottage, or campground, when filing their personal Income Tax and Benefit Return for 2022. You can claim eligible expenses of up to $1,000 as an individual or $2,000 if you have a spouse, common-law partner, or eligible children, to get back up to $200 as an individual or $400 as a family.

    With social distancing and health-conscious travel in full-effect, Ontario staycations offer a way to relax, unwind, and get a taste of what this big, beautiful province has to offer. A staycation in Ontario offers a budget-friendly alternative to international vacations. And whether you’re looking for spectacular Ontario landscapes, charming small-town bed and breakfasts, or pampered romantic getaways, this list of Ontario staycation ideas will help you plan a vacation in your own backyard.

    Lap in Rustic Luxury at an Ontario Glamping Destination
    One of the best ways to combine social distancing with an Ontario staycation is by experiencing one of the provinces incredible glamping properties. What’s glamping you ask? Well, think of luxurious camping. Most Ontario glamping properties include a secluded tent or tepee. These are usually paired with a cozy bed, outdoor kitchen, outdoor shower, and enough privacy to feel like you have the whole property to yourselves.

    And for those looking for an Ontario staycation, you’ll be excited to know that there are some absolutely incredible glamping spots in Ontario. Spots like Bartlett Lodge in Algonquin Park and Fronterra Farm in Prince Edward County offer that perfect near-local getaway. If you’re looking for something cozy but without all the luxurious trimmings, you can also consider cabins in many of the Ontario provincial parks or the tent-like yurts on offer in the Ontario National Park system. In Norfolk County, you may also want to check out Long Point Eco-Adventures.

    Sip Your Way Through an Ontario Wine Tour
    Ontario is fast becoming a great escape for wine lovers from around the world. With 4 unique wine regions, Ontario wines offer some great variety. And the vineyards in the province can offer an experience for everyone from those new to tasting right up to the complete wine snob.

    For your best wine-fueled Ontario staycation, make a choice between Prince Edward County, Niagara, or Pelee Island in the south of the province. Prince Edward County offers a quaint assortment of small towns, and two of Ontario’s best beaches. The Niagara region is home to two of the provinces wine regions, the Niagara bench, and Niagara-on-the-Lake wineries. You’ll find some of the provinces most picturesque vineyards, historic hotels, and of course, the majestic Niagara Falls.

    If you’re looking to explore a little bit of Ontario’s deep south, a trip down to Windsor-Essex and Pelee Island is the Ontario staycation for you. This unique spot in Ontario has dozens of small to mid-sized wineries with fascinating regional-specific flavours. Norfolk County is also an up-and-coming wine region that you should keep on your radar. Here are some of the top wineries and breweries in Norfolk County.

    Add a Theme to Your Ontario Staycation with These Themed Hotels
    Whether you’re looking for silly or fun, there are plenty of themed hotels in Ontario to shake off the ordinary and give you a taste of adventure. From the classic kid-friendly camp rooms of Great Wolf Lodge in Niagara Falls to the out of this world space-themes and Rolls Royces of the Fireside Inn in Kingston, you’ll feel like you’ve travelled to a parallel universe. For a taste of something a little more classic, consider the Drake Motor Inn in Wellington. This 50’s inspired motor-inn offers the perfect escape to combine with a tour of craft breweries in the county.

    Snorkel Among Shipwrecks in Tobermory on the Bruce Peninsula
    A quick look out at the blue waters of Tobermory and you’ll know why this is one of Ontario’s best staycation ideas. With its sparkling surface, you might think you’ve gone to the Caribbean.

    Just beneath the surface of Lake Huron lurks a magical wonderland of historic ships that have been scuttled or lost on the rocky bottoms of this beautiful great lake. Hundreds of shipwrecks lie on the bottom of Lake Huron. Some of them are visible from the town shores in Little Tub and Big Tub harbour. So head over to Divers Den, the local Tobermory dive shop to rent some snorkel gear. Soon you’ll be floating just a few meters above some of Ontario’s coolest shipwrecks.

    Combine your visit with a glass-bottom boat tour to Flowerpot Island. Or skip over on the Chi Cheemaun Ferry to Manitoulin Island for some of the best stargazing in Ontario at Gordon’s Park.

    Chase Waterfalls in Hamilton
    This province is blessed with some absolutely stunning waterfalls. And if you’re looking for waterfalls in Ontario, the area around Hamilton will give you the best bang for your buck. In fact, there are over a hundred waterfalls sprinkled throughout the escarpment in Hamilton. Some are big and bold such as the Devil’s Punchbowl and Webster Falls. While others are tall and elegant such as Tiffany Falls.

    You can easily make a weekend out of waterfall watching in Hamilton. And spread out the fun by taking in some of the cities great locally-run restaurants like Merit Brewing Company or Mezcal Tacos & Tequila Bar. The fun doesn’t have to end after the sun goes down either. Head over to the local Starlite drive-in and catch a double-feature. You can find this and other great drive-ins in Ontario here.

    Rent a Houseboat & Cruise the Trent Severn Waterway
    Ontario has loads of magnificent boating destinations. You can pick the Rideau Canal, the Muskoka Lakes, or even boat along the shores of one of the provinces Great Lakes. But one of the most classic Ontario staycation ideas is renting a boat and cruising the Trent Severn Waterway through some of Ontario’s best small towns.

    There’s something absolutely magical about exploring the amazing lock system in towns such as Peterborough and Fenelon Falls. Life on the water rolls at a different pace than it does on land. Getting on the water is super easy too. You just need to apply for a boater’s license (which is a lifetime license) and connect with one of the countless marina’s throughout the province to find that boat that’s perfect for your outing.

    Join One of the Amazing Food Tours in Toronto
    There’s no getting around it. Toronto is home to some of the best food in the world. Toronto is of the most culturally diverse cities on the planet. And all of these cultures have blended, harmonised, and given birth to some of the most brilliant flavours imaginable.

    Year after year new and exciting restaurants explode onto the Toronto food scene. You’ll find everything from Greek, Somali, Nepalese, and even incredible Indigenous-themed restaurants in Toronto. For one of the best Ontario staycation ideas, join one of the local food tours through local guides such as Tasty Tours, Culinary Adventure Co., and Travel Mammal to experience both the flavours and the history of the Toronto food scene.

    Live Life to its Cheesy Best at Clifton Hill in Niagara Falls
    Sometimes the best staycations in Ontario mean getting a little crazy and feeling like a kid again. And there is no place where you let your maturity slide more than on Clifton Hill in Niagara Falls. Along Clifton Hill you’ll find every possible form of entertainment imaginable. Wax museums, haunted houses, mirror mazes, arcades, and more. You can spend hours visiting the Ripley’s Believe it or Not Museum and enjoying a game of Jurassic Park mini-golf. Or take in the views of the falls from the Niagara Sky Wheel.

    If you want to make a wild weekend out of it, include dinner at the Table Rock restaurant overlooking the Falls before taking on a sunset zipline. In the morning, head down towards the Whirlpool Golf Course and brave the Niagara Adventure Course. It’s sure to get your adrenaline pumping.

    Even if cheesy fun isn’t your style, there are loads of things to do in Niagara Falls for all ages. Enjoy hiking the escarpment, picnic among the Dufferin Islands, or, you know, you can look at that little waterfall they have there too.

    Pamper Yourself at One of Ontario’s Incredible Resorts
    Sometimes, the best Ontario staycations mean getting away from it all. Tucking yourself away in a spa or resort and living in luxury for a few days. There’s no better way to tune out the world than at some of Ontario’s best resorts.

    There are a number of very popular resorts. Langdon Hall in Cambridge is a place for pampering and special occasions. Surrounded by 75-acres of forest, and with rooms that include a wood-burning fireplace, you may not want to leave. Deerhurst Resort in Huntsville offers the perfect combination for those who love to stay active, but also want a little pampering. Enjoy the great outdoors with boating, kayaking, or hiking, and follow it up with a complete spa treatment onsite.

    Take an Historic Steamship Cruise Through the Muskoka’s
    The Muskoka lakes are world-renowned for their beauty. But there’s loads of history in this part of Ontario to experience as well. By heading up to Gravenhurst, you can combine a little bit of both with a Lake Muskoka steamship cruise. Lake Muskoka Steamships has a fleet of 2 lake cruisers. One of them is the RMS Segwun, a 130-year-old steamship that’s been around almost as long as Canada has.

    You can also spend some time enjoying the beautiful Gravenhurst shorelines. Lake Muskoka Steamships also runs the Muskoka Discovery Centre which houses a fantastic museum and a flotilla of classic boats. It’s the perfect escape for the naval junkie.

  • What is a Good Credit Score?

    What is a Good Credit Score?

    Have you ever been surprised to find that you were turned down for credit, or that you had very little credit history at all? Even if your credit history is rock solid, it’s important to know what goes into determining your credit score. Understanding how your credit score is measured will help you improve it and keep it in good standing.

    What is a Credit Score?
    A credit score is a summary of an individual’s entire credit history and serves as an indicator of their ability to meet their financial obligations. Your credit file is a fairly complex document that’s full of various codes and data. The credit bureau provides an ongoing analysis of that data, summarizing it into an easy-to-decipher 3-digit score, allowing lenders to assess the overall quality of your repayment history, before deciding to dig deeper.

    For example, an excellent credit score may indicate that no further investigation is necessary, an average score might suggest a deeper review, and a poor one could mean a summary denial. In short, credit scores make life easier for the people and agencies we do business with, but not necessarily for us. Because of this, it’s important to keep a close eye on your credit score, so you can fix what’s broken before it becomes a problem.

    How Important is Your Credit Score?
    We generally tend to only think about credit scores when it’s time to borrow money. It might be for a car loan, a new credit card or credit card limit increase, or even a mortgage. Credit scores matter in the approval process of nearly any type of loan, but they can also affect the interest rate you pay. The best rates are usually reserved for those with the best credit scores. So, generally speaking, good credit scores translate into lower interest rates.

    Other Uses for a Credit Score
    But there are situations apart from borrowing, where credit scores are important. Employment is one. Prospective employers routinely pull credit reports on their new hires, often to determine if they’ll hire them at all. Insurance companies will run credit checks on new customers, and the resulting score can have an effect on the premiums they’ll pay.

    Nowadays, just searching for an apartment to rent can result in your credit being checked. Running a credit report before approving your lease application has become standard procedure for many landlords and property management firms. Sooner or later, when you need that new loan, mortgage, or new apartment, the strength of your credit will become very important.

    Who Keeps Track of Your Credit Score?
    In Canada, there are two companies that maintain your credit score. One is Equifax, the other is TransUnion. Anytime a change is made to your borrowing account, your lender sends the information to Equifax and/or TransUnion. This could be to report a credit limit increase, a regular or late payment, or the payment of your account in full.

    Some lenders will send your information to both credit bureaus, some only deal with one or the other. For this reason, your credit score can vary between Equifax and TransUnion. Both companies also use a slightly different algorithm to determine your score, which can also result in a slight variance, although it’s not usually significant. While you have little control over which credit bureau your lender chooses, it’s important to be aware that there are more than one, and that either (or both) could be used.

    What’s Considered a Good Credit Score?
    Now that we know who measures your credit score, and why it’s so important, let’s take a look at what is considered a good score in Canada. Because the parameters have changed somewhat in recent years, it’s not always clear what is considered a good credit score anymore.

    Let’s take a look at the different levels, and how they are categorized:

    • Excellent = Score of 800 or above
    • Very Good = Score between 720 and 799
    • Good = Score between 650 and 719
    • Fair or Average = Score between 601 to 649
    • Poor = Anything below a score of 600

    How to Interpret Your Credit Score
    So, what do these different levels mean? For example, what’s the difference between having a good score and a very good score? The impact of your credit score on an application can vary, but with all else being equal, we can draw some general conclusions from the categories described above.

    If your credit score is above 800, for example, you likely won’t have any difficulty obtaining credit, and the lender will often provide an approval quickly, without requiring additional documentation. Between 720 to 799 (very good), approval is still very likely, but you may not qualify for the best rates the lender can offer. If your score is good (between 650 and 719), you may not qualify for certain products, depending on where your score falls in the range. For example, some premium credit cards have a minimum credit score requirement for approval. If your score falls below 650, most lenders will want to dig deeper into your credit history, to find out why the score is not as strong.

    Based on what they find, they may decline your application, or require you to provide a co-signer or additional security. Generally speaking, a credit score of less than 600 (poor) will be insufficient in order to obtain a mortgage. There are lenders who will consider your application; however, you may be subject to much higher interest rates.

    As you can see, a higher credit score means greater flexibility, and freedom when borrowing. Not only does it make it easier to be approved for a loan, a job, or an apartment, but an excellent credit score will also mean that you’ll pay less for whatever it is you’re buying.

    Tips for Improving Your Credit Score
    If you want to improve your credit score, there are a number of things you can do. Here are some tips that can help you better your credit score, with the first one being the most important:

    Pay Your Bills on Time
    Your ability to repay your loans is the most telling aspect of your credit score. Late payments are recorded and stay on your record for several years. If you pay late repeatedly, you are likely to see a rapid decrease in your score.

    Keep Your Balances Low
    Don’t max out your credit cards, or lines of credit. When you are close to your available credit limit, it sends up red flags and can lower your score. If you cannot pay off your credit card in full every month, try to keep the balance below 50% of your credit limit. A high credit utilization ratio will lower your overall score.

     Build Credit History over Time
    The further back it goes, the better. A long credit history (if it’s a good one) will strengthen your score. Think twice about closing a paid-off credit card that you no longer use if it’s your earliest source of credit.

    Hold Various Types of Credit
    You don’t want all of your credit to be in one category. Mix it up a little. Credit can include credit cards, lines of credit, car loans, RRSP loans, and mortgages. The variety of revolving credit and installment credit can help reinforce your credit history and show that you can handle different credit situations.

    Only Apply for Credit You Need
    Every time you apply for a credit product, your score drops ever so slightly. The more credit inquiries you have in your recent history, the more credit hungry you look, and the lower your credit score will be.

    Check Your Credit Report Frequently for Errors
    With so many parties reporting your credit information to the bureau, a simple keystroke error could result in a late payment being recorded where there was none. While it’s possible to dispute the information and get the lender to change it on your credit report, the process can be a real hassle. You should check your credit report periodically for errors.

    Following the above steps should help you improve your credit score, however, be patient, as it can take time. You may need 60 days before seeing any improvement, and it could take longer than four months to see substantial improvement.

    You Need to Use Credit to Get a Credit Score
    You may be very responsible with your finances. You don’t use credit cards, always preferring to pay with cash. If you are living debt-free, then you may find that your credit score isn’t as good as it could be, and it could mean a higher interest rate on loans you are approved for.

    If you don’t make use of credit, then there is no payment history with which to establish a score. And although debt-free living is beneficial in many ways, it, unfortunately, won’t help your credit score. Since the most important factor is your payment history, you need to be making payments on something in order to have a good score.

    What Is a Good Credit Score in Canada and Why it Matters?
    Maintaining a good credit profile is an important part of your financial health. And while there are many things to consider, the most important step you can take is to make all of your payments on time. As for your actual credit score, higher is better, but you don’t need to have a score over 800. As long as your score is over 700, you’re unlikely to be denied credit due to the score itself. If your average credit score is below 700, there are steps you can take to improve it.

    Look after any unpaid collection items or judgements that are impacting your credit. If you have accounts that are in arrears, it’s important to bring them up to date as soon as possible. If you have revolving credit, such as a line of credit or credit card, make sure you are at least making the minimum payment each month. Failing to do so will impact your credit score negatively. If you’ve never ordered a copy of your credit report, you can sign up through Borrowell or Credit Karma and get your free credit report. If you do, you’ll be well on your way to building a strong credit history.

  • Maximizing Your Tax Return

    Maximizing Your Tax Return

    If you filed your taxes and found you’re getting a refund this year, you might be wondering how to use the money. Once you’ve determined you’ll be getting a tax refund this year, you’ve got options when it comes to using your extra cash. It can be tempting to spend the sudden windfall on a shopping spree, but if you’d rather play it safe this year, we’ve put together seven sensible — but satisfying — ways to use your tax return.

    1. Pay Down Your Debt
    If you’re carrying personal debt, you’re not alone. The average household debt hit $72,950 at the end of 2019, up 2.7% from the previous year, according to a recent consumer debt study. By using your refund to pay down your debt, not only will you lower your current balance, but you’ll also reduce the amount of interest you’ll pay on your remaining balance — and that will put more money in your pocket down the road.

    2. Open or Contribute to a Tax-Free Savings Account (TFSA)
    A TFSA is a great savings tool for both short- and long-term goals. It’s a flexible savings plan that lets Canadians who are 18 years and older save and invest tax-free, with competitive interest rates. Anything you contribute to a TFSA, as well as any income earned in the account (such as investment income and capital gains), is generally tax-free, even when it’s withdrawn.

    3. Boost Your Registered Retirement Savings Plan (RRSP)
    If you’re getting money back in the form of a tax refund, a smart way to use the money is to stash it away in your RRSP. An RRSP is one of the most effective retirement saving tools available to most Canadians. And since your money is sheltered and doesn’t get taxed until you withdraw it, your funds can grow even faster.

    Another benefit is that RRSP contributions are tax-deductible, which means they lower your annual taxable income for the next year. To find out your RRSP deduction limit, look at your latest notice of assessment or check with the Canada Revenue Agency (CRA).

    4. Spend a Little, Save More
    If you’d really like to treat yourself to something new with your tax refund, there’s a way to do it without feeling guilty. A good compromise is to buy one (reasonably priced) treat and put the rest of the money into your savings. Where you save the money is up to you. You’ve got plenty of options: a regular savings account, a Tax-Free Savings Account (TFSA), or an RRSP. Putting a good chunk of your tax return in your savings is a smart move, especially during tough financial times.

    5. Save for Your Kids’ Future
    If you have kids, you can use your tax refund to boost their education funds. The cost of university is steadily rising, and the sooner you can start saving for it, the better. A four-year degree is likely to cost more than $100,000 — making a Registered Education Savings Plan (RESP) one of the best investments you can make in your child’s future.

    6. Invest in Your Home
    We’re spending more time at home than ever, so why not use your tax refund to improve where you live? You can do this in a couple of ways. If you’re thinking of buying a new home, you can use your refund to save up for your down payment (you may even be eligible for a first-time home buyers’ tax credit). Or if you already own a home and you’re content, consider investing in renovations, whether it’s a big project like giving your bathroom a total refresh, or a smaller investment like creating an office nook to make working from home more enjoyable. It may seem like an indulgence, but by upgrading your home, you’re actually adding value to it for the future.

    Getting a tax refund can feel like an unexpected gift. To make the most of the money and bring yourself peace of mind, it’s a good idea to resist the urge to spend it all, and instead take the time to think about how you can use your refund to make the biggest impact.

  • How to Make Money Online

    How to Make Money Online

    Many people often wonder how they can make money online, and although there are many ways to do so, some are easier than others. What we do know, is that there are no get rich quick schemes, and anyone who tells you otherwise is lying. If you want to make money online, be prepared to put in the time and a fair amount of money in some cases. Treat your online endeavor like you’re running your own business. It’s that simple. The good news is that if you’re not afraid of working hard, you can earn a decent amount of money.

    Become a Freelance Writer
    If you love to write, there are many websites out there that will pay you to create content. While you don’t need a master’s degree, it helps if you know a specific area: personal finance, travel, parenting, etc. The more you write in a particular niche, the more you can establish yourself as a trusted voice. A great way to get noticed is to start a blog, which can function as a resume of sorts.

    Sell Homemade Goods on Etsy
    If you’re into arts and crafts, there’s money to be made by selling your creations on Etsy, one of the best websites for selling homemade goods. Millions of people browse Etsy, giving you a huge audience that you can sell your products.

    Rent Your Home on Airbnb
    Millions worldwide are making money by renting out their homes, or even a room in their home, via Airbnb. In fact, some have managed to make Airbnb their full-time business. The beauty of Airbnb is that you choose when to make your home available and the price you’ll charge.

    Sell Your Stuff
    This is a great way to make money immediately. If you find yourself in a cash crunch or financial emergency of sorts, get rid of stuff you don’t need by selling it online through sites like Kijiji, Facebook Marketplace, eBay, and Amazon. Most of these websites offer free listings for sellers.

    Start a Blog
    Earning income from your own blog can take a long time to grow, so you have to have something else driving you. Write for enjoyment, and eventually, the money might follow. Money-making bloggers earn income from various sources: ad revenue through Google Adsense, Mediavine (for higher traffic blogs), and affiliate marketing. Amazon Associates Program, or by selling products such as eBooks and online courses.

    Start a YouTube Channel
    Making money on YouTube can take a while, but it is definitely possible. The most common way is to earn revenue on ads displayed in and around your video content. The more views your videos receive, the more money you can make. You do need to hit a minimum threshold to qualify for YouTube’s Partner Program.

    Web Design
    Web design is a skill that can be entirely self-taught. The first step is to build a few websites of your own. Once you get the hang of it, you can offer your services to others. Depending on how developed your skills are, you can charge a decent sum of money. While it is a competitive field, experienced web designers can command thousands of dollars to build a site.

    Manage Facebook Ads for Local Businesses
    Ever notice the posts marked ‘sponsored’ that show up on your Facebook feed? Those are ads paid for by the endless number of companies vying for your attention. Businesses pay good money to place ads on Facebook, but they need someone to help them build the ads and run the campaigns. You can make good money by providing this service to small businesses in your area. Fitness clubs, coffee shops, even vet clinics, or chiropractic offices make for great potential clients. While you can teach yourself how to run Facebook Ads, I recommend taking an online course, which will not only help you create effective ad campaigns but show you how to land clients.

    Work for a Company Remotely
    There are a large number of companies that hire work from home employees. The types of jobs can vary, but they often involve customer service roles, data analysis, and market research. The best way to locate work from jobs is to visit the careers page on the company’s website, refine your search using keyword filters, like ‘remote’ and ‘work from home. Well-known brands, such as American Express, Staples, and Google, have all been known to hire work from home employees.

    Become a Website Tester
    If you spend a lot of time surfing the web, there’s a good chance you know what makes a great website. Some companies will pay you up to $30/hour to browse through website content and document your experience.

    Online Travel Agent
    This is a great way for travel buffs to make money online. Earn a commission income by helping travelers with their flight and hotel arrangements and other aspects of the vacation planning, like cruises, excursions.

    Professional Organizers
    If you are one of those ultra-organized people who have a place for everything, some people will pay you to go through their home and help them develop a plan to declutter. You can choose to do this as a coach or consultant or roll up your sleeves and help your clients do the heavy lifting, so to speak.

    Personal Shopper
    Believe it or not, this is a thing. Some people will pay someone else to do their shopping for them. If you love to shop and have a discerning eye, this could be a great way to make extra money. One nice thing about this job is that you can shop online and do most of your research there also, although you might prefer to head to the mall. It all depends on the kinds of items your client is looking for.

    eBay Reseller
    The business model is simple. Buy items at a steep discount, and then sell products online for a profit, as an eBay reseller. You can learn tricks to be able to spot bargains, but you also need to figure out the types of items that are in demand and will be easy to sell. The last thing you want is to be left holding onto a bunch of useless products.

    Home Staging
    When a house goes up for sale, it needs to stand out to get noticed. To draw in prospective buyers, realtors will often pay to have the home staged or, in other words, looking its best for the camera. Usually, this involves decluttering or adding accessories to spruce up the look and feel of a room. The changes are temporary, but the job requires a similar skill to interior decorating. To get started, you could provide the service to friends and family to create a portfolio of your work. Then, reach out to a few realtors in the area to let them know about your service and your rates.

    Graphic Designer
    If you know your way around programs like Photoshop or Adobe Illustrator, there’s a good chance you have the skills necessary to create or edit images for websites, advertising campaigns, or social media posts. Many businesses need these services but don’t have the budget to hire a dedicated graphic designer.

    Social Media Manager
    Do you spend hours on Snapchat and Instagram? If so, why not get paid for it. These days, every business needs to have a social media presence, but many entrepreneurs don’t have the time to stay on top. Some companies will outsource social media tasks to someone who can build an audience and create engaging content. Try reaching out to businesses in your area and offer to create and manage social media content for a monthly fee. You might be surprised by their willingness to pay for this service.

    Publish & Sell Stock Photos
    Perhaps you love taking pictures but have no interest in dealing with customer service demands with wedding or family photography. Instead, you could publish photos you’ve taken out of your own enjoyment and sell them online through stock photo sites.

    Become an Online Tutor
    If you love to teach and have skills in math or English, you can find work as an online tutor.

    Teach Music Online
    Turn your love for singing, or playing a musical instrument into extra income, by offering music lessons online. Lessons can be done over video via Skype, making it almost as though you’re in the room with your student. As for payment, it’s easier than ever with e-transfer or PayPal.

    Offer Bookkeeping Services
    If you know your way around booking software, such as QuickBooks, you can pick up work doing bookkeeping for small businesses. This is often very part-time work, a few hours per week, so depending on how much time you have, you could choose to take on several clients. Start by advertising your services through your local Facebook Community Group or by reaching out to small businesses in your area.

    Online Coaching
    If you have a well-developed skill set, along with some real-life experience in any number of fields, chances are some people will hire you as an online coach. Fitness & nutrition, sales, leadership, human resource management, you name it. The beauty of this online job is that you set the price and decide how much you want to work. Depending on the subject, this can be a very lucrative online business.

    Proof-Reader
    Closely related to freelance writing, another way to make money is by reading articles written by others. What I love about editing or proofreading is that it’s completely location-independent. You can work from anywhere; all you need is a laptop. If you have the skill, it’s a fairly easy job. There is no shortage of places where you can find work as a proof-reader, in addition to listing your services on sites like Upwork.

    House or Pet Sitting
    Many people prefer not to leave their house empty when they go away for vacation. Or, if they have pets, they’d much rather leave them at home where they’re comfortable, instead of dropping them off at a kennel. If you don’t mind staying in someone else’s home, you can make good money, with some added perks, by offering to house or pet sit for families in your neighbourhood.

    Audio or Video Editor
    Many content creators, such as recording musicians or videographers, don’t have the time to edit their own audio or video recordings. If you have the talent to do the job, you can make good money by helping them with the audio or video editing process. Any newer personal computer, equipped with the necessary editing software, should be sufficient, and files can be transferred online, making this a job you can do from anywhere.

    Final Thoughts: Making money online isn’t for the faint of heart. Although it takes time, there is something gratifying about working online from the comfort of your own home or anywhere you can get a Wi-Fi connection, for that matter. It’s also nice to have the flexibility to take breaks whenever you need them and be your own boss. The main thing to remember is that if you want to make anything more than pocket change online, you need to treat it like a business rather than a hobby.

  • Conversations to Haver Once Your Teen Starts Earning Money

    Conversations to Haver Once Your Teen Starts Earning Money

    Once your teen starts earning a paycheck, the importance of money conversations should not be overlooked. As a parent or guardian, it’s your job to facilitate money talks and encourage your teen to ask money-related questions when they arise.

    Below, we’ll dive deeper into why money goals are important for teens as well as how to help your teen save and plan for unexpected expenses. We’ll also discuss how to ensure money conversations are a regular part of your teen’s life.

    Key Takeaways:

    • Once teens begin to earn money, it’s vital that they save for short-term goals, long-term goals, and unexpected expenses.
    • Newly employed teenagers should dip their toes into investing.
    • Ongoing money conversations can help your teen avoid common money mistakes and set them up for a healthy financial future.

    The Importance of Setting Money Goals
    Financial goals are milestones you set for your money over specified periods of time. They’re just as important for your teen as they are for you. Encouraging teens to save money and set financial goals will help them learn about the importance of financial literacy and creating healthy habits around their finances.

    Short-Term Savings Goals
    Short-term savings goals are those your teen can achieve in less than a year. Saving for a concert next month is a good example of a short-term savings goal you can help them meet. Sit down with your child and look at how much money they earn on a weekly or monthly basis. Then, ask them about the price of the concert ticket and work together to determine how much they’ll need to save from their paycheck to buy it. Write down this information and hang up the short-term savings plan you create on your fridge or anywhere else your teen will see it often.

    Long-Term Savings Goals
    Long-term savings goals typically take more than a year to accomplish. Your teen may want to buy a car, go on a spring break trip with friends, or pay for college tuition. With long-term goals, it may make sense to introduce a budgeting method, such as: 50/30/20. The 50/30/20 budget method can ensure your teen has enough money for their needs, wants, and savings goals. They allocate 50% of their income to their needs, 30% to their wants, and 20% to their long-term savings goals.

    What Does Saving Look Like?
    Many teens graduate high school and go off to college without a real understanding of saving money and how to spend responsibly. When this happens, they may make financial mistakes that could follow them out of college and into their adult years. Teaching your teen how to budget appropriately and save will help them learn to live within their means when starting their career. To promote saving early on, you can help your teen open a savings account.

    Ideally, you’d choose a savings account at a bank or credit union near your home with digital tools like online banking that your teen will appreciate. Not all savings accounts are created equally, so shop around with your teen to find a no-fee savings account that works well for how they earn, access, and save money.

    Planning for Unexpected Expenses
    Teens should know that planning for unexpected expenses is different from saving for a particular financial goal. Saving for a financial goal, like buying a television, can be completed on a short-term or long-term basis. However, saving money for unexpected expenses helps you maintain financial stability in a job loss, car accident, or medical emergency that medical insurance does not cover. To prepare your teen for unexpected expenses, teach them how to build an emergency fund. Let them know that if their car breaks down, for example, an emergency fund can cover the cost without putting them into debt.

    Put Your Money To Work: Investment Options
    Consider setting up a custodial investment account for your teen. This type of account is set up by an adult for the benefit of a minor and offers the opportunity for parents to teach kids some basic investing skills. You can explain the investment options in your teen’s account and review statements with them.

    Teens may be more inclined to invest if they can put their money toward companies they love. For example, if your child is an athlete and supports Nike products, you can talk to your teen about Nike as a company, track how their stock is doing, and even buy some shares of it together for them to learn.

    Investing Large Money Gifts
    As your teen grows up, they’ll likely receive large monetary gifts from family members for special milestones like their bar or bat mitzvah, sweet sixteen, or graduation. While they may be tempted to spend this money on fun, big-ticket purchases like new furniture or electronics, saving it can make their life easier in the future. Encourage your teen to be smart with large gifts and allocate them toward long-term financial goals, like saving for college.

    What’s the Deal With Taxes?
    Since taxes are a key part of everyone’s finances, teach your teen the basics. Let them know that taxes are deducted from their paychecks, so they’ll pocket less money than they earn. Also, explain that they’ll need to file a tax return every year and can do so with the help of tax software or a tax professional. When you talk to your teen about taxes, keep things simple. Overcomplicating the conversation and telling them more than they need to know may overwhelm them.

     Keeping the Conversation Going
    You should make time to talk to your teen about money whenever they need to. Basic financial literacy is incredibly important because financial mistakes made early in life can change the entire trajectory of one’s economic life circumstances. Teaching teens about finances can save them from making crippling mistakes that haunt them throughout their lives, like starting a working career with debilitating student loan balances.

    Keep the money conversation going organically. In short, it’s important to create opportunities for children, adolescents, and teens to use money — saving it, spending it, and even making mistakes with it. And, when possible, to invite children, adolescents, and teens to participate in household financial decision making, like drafting a grocery list given a budget.

  • The 10 Best Organizational Tips

    The 10 Best Organizational Tips

    Getting your home organized can be very overwhelming. We don’t all have the time, patience, or dexterity to fold our shirts origami style or put our books in rainbow order and we can’t all live in a stoic concrete box like Kim Kardashian. Don’t get me wrong, I love a good pantry organizing TikTok as much as the next mom, but when it comes to organizing my home, I need a happy medium.

    If you’re not ready to go full Marie Kondo minimalist, fear not, I’m with you. I like order and organization, but you know what else? I like my stuff. In this post, I’m sharing the tips and products that have helped me make our home more organized and, most importantly, more functional.

    1. When in doubt, label it.
      If I had a dollar for every time I got asked, “Where is the [ITEM]?” or “Is this the right [ITEM]?” A label maker can help everyone find what they need, especially if you’ve removed items from their original packaging after watching one too many TikToks.
    1. Tackle the “junk drawer.”
      We’ve all got one. That drawer in the kitchen or office that just seems to be a magnet for anything and everything. But taking the time to organize it with some small bins or containers will make it much easier to navigate going forward.
    1. Invest in the right storage options.
      Walking into one of those organizational stores, I’ll always run the risk of blacking out and buying everything. Do I need to decant all of our cereal? No. But choosing the right options to store valuables like fine china, holiday decor or keepsakes is worth it. Measure your shelves and spaces before you go so you have an idea what will fit.
    1. Choose “functional” over “pretty.”
      If you spend hours, days or weeks making your home look pretty but then you can’t find anything, you’ve defeated the purpose. I’ll go back to the rainbow books option — it looks amazing, but I can’t always remember the color of that cookbook I need.
    1. Utilize dead spaces.
      There are probably lots of dead spaces in your home just begging to be used. Hang a shelf above a bathroom door for linens or tuck a rolling shelf between the refrigerator and the wall. Every bit of space can be utilized, you just have to get a little creative.
    1. Create zones.
      With so many of us working from home now, the areas of our home may be blurring together. That’s why it’s important to create work, dining, and hangout zones. Designate a zone for dropping bags and shoes and one for all of your home’s cleaning supplies.
    1. Think “up.”
      Get things off surfaces like countertops and the floor as much as you can. Hanging baskets, shelves and over-the-door organizers can help you lift the clutter away and to whomever created those sticky strips that don’t damage walls, I raise my glass to you.
    1. Keep the important things together.
      Essential items like keys, bills and other notices should always be easy for everyone to find. Choose a place you all pass by daily to keep the mail, hang a calendar for managing schedules and add a board for reminders and notes.
    1. Make your wardrobe visible.
      If you can’t see it, you probably won’t wear it. Spending the time to organize your closet will save you time and money down the road. Group like items together and think of a system that works for your lifestyle — if you pretty much always wear pants and a sweater during the week, put those items near each other. I also like to do a seasonal cleanout. Once a season has ended, if you haven’t worn something, it’s time for it to be donated or sold. One way to gauge what you’re actually wearing is to wrap an elastic around each hanger in your closet. Once you wear something, remove the elastic. Any elastics left at the end of the season will be easy to spot.
    1. Hide those cords.
      Exposed electric cords are like nails on a chalkboard for me. If I see one, I can’t stop staring at it. Cord hooks and management boxes can help you hide the clutter and be sure to use power strips with surge protectors when you can for added safety.

    ~ Kim Holderness

  • Fixed Rate vs Variable Rate Mortgages: Which Should You Choose?

    Fixed Rate vs Variable Rate Mortgages: Which Should You Choose?

    One of the biggest decisions you’ll face when getting a mortgage is whether to choose a fixed or variable rate mortgage. At the moment, it’s hard to go wrong with either one. After all, mortgage rates in Canada are at historic lows. But the type of mortgage rate you choose is something you should spend some time considering, as the best choice depends as much on your individual circumstances as it does on any economist’s interest rate outlook.

    What is a Variable Rate Mortgage?
    A variable-rate mortgage is a mortgage linked to the Bank of Canada Prime Lending Rate and fluctuates during the mortgage term. You can obtain an open or closed variable rate mortgage, but the most common term is a 5-year variable closed.

    For example, at the time of this writing, the Bank of Canada Prime rate is 2.45%. If a variable mortgage were priced at Prime -.90%, your interest rate would be 1.55%. If Prime were to increase by 0.25% to 2.70%, then your mortgage interest rate would rise accordingly to 1.80%. Even though variable mortgage rates fluctuate during the term, the monthly payment remains the same.

    What is a Fixed Mortgage Rate?
    A fixed mortgage rate stays fixed for the length of the mortgage term. It’s available in terms ranging from 6 months to 10 years, although the most popular term is a 5-year fixed rate. Unlike variable rates, which move with the Prime Lending Rate, fixed mortgage rates follow Canadian bond yields.

    Fixed rates are usually higher than variable rates, with the higher rate trade-off being cost certainty. Fixed-rate borrowers are willing to pay a premium to lock in their rate for a specific time period. Banks price fixed rates higher than variable rates because they present more risk to the mortgage lender due to the rate commitment made to the borrower.

    A History of Fixed vs. Variable Mortgage Rates
    If you look back at the past 20 years or so, variable mortgage rates have been consistently lower than fixed rates with only a couple of exceptions. This might make it seem like choosing a variable rate would be a no-brainer, but it’s not so clear-cut. At the moment, both types of mortgage rates are at historic lows, and the gap between them is very narrow. So, there are fewer savings to be had by going with a variable rate mortgage, while the risk of rising interest rates remains.

    Reasons to Choose a Fixed Mortgage Rate
    Here are three reasons why you might want to choose a fixed-rate mortgage:

    1. You expect interest rates to rise.
    While no one knows when the prime rate will rise and fall or by how much, the economy can provide signals that rates may be headed upwards or downwards. If you anticipate that mortgage rates may be on the way up and you can secure an attractive fixed-rate, all things being equal, it might be your best choice.

    2. You have limited budget flexibility.
    Perhaps you’re buying your first home, or your affordability has been stretched with the mortgage you’re taking on. If you lack the flexibility in your budget to handle a sudden increase in your mortgage payment, your best option is to choose the certainty of a fixed-rate mortgage.

    3. You are a risk-averse by nature.
    Regardless of your financial position, if you are risk-averse by nature and having a variable interest rate will cause you sleepless nights, it’s not worth the hassle. Go with the fixed-rate mortgage.

    Reasons to Choose a Variable Mortgage Rate
    Sometimes a fixed rate is the way to go. But here are four reasons why a variable mortgage might be the right choice:

    1. You expect interest rates to fall or remain flat.
    A variable-rate mortgage could be the best choice in a period of a stable or falling prime rate, even if it’s only slightly lower than the going fixed rate because the terms of a variable mortgage are generally more flexible than those of a fixed mortgage. (see #4)

    2. You have plenty of budget flexibility.
    The numbers don’t lie. Over the long term, you’ll be ahead of the game by choosing a variable rate. But there’s some risk involved. If your cash flow situation is good and you can withstand the potential of a sudden increase in your mortgage interest costs, a variable rate could be worth the risk.

    3. You are risk-tolerant by nature.
    If you are a person who can handle a fair amount of risk, then you probably have the fortitude to handle the potential ups and downs of a variable mortgage, all things being equal.

    4. You Plan to Sell Your House
    One of the biggest drawbacks of a fixed-term mortgage is the potential for astronomical penalties, should you decide or be forced to move in the middle of your mortgage term.

    Fixed-mortgages can be subject to something called an Interest Rate Differential charge or IRD. Variable mortgages are usually only subject to a more predictable 3-month interest penalty if the borrower breaks the mortgage early. So, if you think that you might move before the end of your mortgage term, the variable rate is probably a safer bet. You could opt for an open mortgage to avoid the penalty, but the interest rates will be far higher.

    How to Reduce Variable Rate Mortgage Risk
    If you opt for a variable rate, you are assuming some risk if interest rates rise suddenly in the middle of your term. Yes, there is the option of converting to a fixed rate, but that forces you to try and time the market, and that’s not likely to end in your favour.

    You can reduce the risk of a variable mortgage by increasing your monthly mortgage payment amount to match what you would be paying with a higher fixed rate. For example, let’s say you have a choice between a variable rate mortgage at 1.75% with a monthly payment of $1600 and a fixed-rate mortgage at 2.25% with a monthly payment of $1685.00.

    You could opt for the lower interest rate but increase your monthly payment to match the fixed-rate payment of $1685.00. This will increase the amount of money going towards your principal, increasing your interest savings, and providing you with a buffer should interest rates rise.

    The Bottom Line on Fixed vs. Variable Mortgage Rates
    There is no shortage of prognosticators ready to tell you that a fixed or variable rate is the best choice. They always seem to know what’s going to happen in the future. However, the truth is that no one knows exactly where interest rates are headed. There are far too many unknown variables that can alter the course of the economy. For example, how many rate forecasters saw COVID-19 coming at the outset of 2020.

    The bottom line is that choosing a fixed or variable rate has as much to do with your individual circumstances, such as your long-term plans, budget flexibility, and your personal risk tolerance level as it does with the cold hard numbers.